Communication from the Commission to the Council concerning the Agreement between the European Communities and the Government of the United States on the application of positive comity principles in the enforcement of their competition laws
Date: 1997-06-18
Institutions: European Commission
Subjects: United States, competition law, extra-territoriality, international economic law, trade agreement (EU)

COMMISSION OF THE EUROPEAN COMMUNITIES 

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B^ssek  18.06. Ï997 
COM(97) 233 Snal 

97/0178 (CNS) 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
concerning the Agreement between the European Communities and 
the Government of the United States on ths application of positive comity principles 
in the enforcement  of their competition laws 

Propos*! for a 
DECISION OF THE COUNCIL AND THE COMMISSION 
concerning the conclusion of the Agreement between the European Communities 
and the Government of the United States of Arnica regarding the application of 
positive comity principles in the Qjaforsemeafi of their competition laws 

(presented by the Commission) 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
concerning the Agreement between the European Communities and 
the Government of the United States on the application of positive comity principles 
in the enforcement  of their competition laws 

L 

Introduction 

Today, many companies are operating world wide or are concluding strategic alliances to have 
a greater presence in foreign markets through an international partner. The economic effects  of 
mergers, restrictive practices or abuses of dominant  positions are often  felt  in countries other 
than those in which the firms concerned are incorporated or based. 

Extraterritorial  Application of Competition Rules 

One  way  for  competition  authorities  to  deal  with  restrictive  practices  with  an  international 
dimension  is  the  use  of  extraterritorial  jurisdiction.  Many  jurisdictions,  including  the 
European  Community,  seek  to  apply their  competition  rules  under  certain  circumstances  to 
behaviour taking place in a foreign country which may harm their markets. 

The United States has expanded its extraterritorial jurisdiction more than any other country. In 
particular,  the  US  claims jurisdiction  to  apply  its  competition  laws  to  behaviour  occurring 
outside  its territory  in  order  to  address  market  access  problems experienced  by US  exports, 
regardless  of  whether  or  not  US  consumers  are  harmed  by  the  activity  in  question.  This 
expansion  of jurisdiction  has  caused  political  frictions  in  EC/US  bilateral  relations  where  it 
concerns behaviour occurring in the European Community. 

Not  only  does  the  extraterritorial  application  of  laws  create  political  frictions  but  practical 
problems  are  also  encountered  due  to  a  lack  of  personal  jurisdiction  and  the  difficulty  of 
obtaining evidence located abroad. 

International  Cooperation 

The extraterritorial  application  of laws is not the  only means  competition  authorities  have to 
ensure that anticompetitive behaviour occurring outside its territory is brought to an end. It is 
becoming  increasingly  obvious  that,  in  order  to  regulate  the  anticompetitive  behaviour  of 
companies  operating  on  the  world  wide  market,  efficiently  and  effectively,  competition 
authorities need to cooperate with each other.  Cooperation between competition  enforcement 
agencies can also ensure that companies are not made the subject of conflicting decisions. 

The  Commission  and  the  Government  of  the  United  States  of  America  recognized  this  on 
23 September  1991  when  they  entered  into  an  agreement  regarding  the  application  of  their 
competition  laws  (the "1991 Agreement")1. The 1991 Agreement facilitates cooperation between 
the Parties competition authorities and the coordination of their enforcement  activities. As well as 

Following  a  decision  by  the  European  Court  of  Justice,  this  Agreement  and  the  exchange  of 
interpretative  letters  dated  May  31  and  July  31,  1995  were  subsequently  approved  on behalf  of  the 
European Community and the European Coal and Steel Community by a joint decision of the Council and 
the Commission of 10 April  1995 (OJ No L 95,27.4.1995, pp. 45 - 50). 

facilitating  coordination,  the  1991  Agreement  requires  a  Party  to  take  into  account  the 
important interests of the other Party at all stages of its enforcement  activities ("traditional" or 
"negative" comity). 

Positive Comity 

The  1991 Agreement  introduces the concept  of positive comity in EC/US relations.  Article V 
provides  that  a  Party  adversely  affected  by  anticompetitive  behaviour  carried  out  in  the 
territory of the other Party may request that other Party to take enforcement  action. 

It is clearly preferable, from the European  Community's  point  of view, that the United  States 
avail  of  the  principle  of  positive  comity  when  considering  anticompetitive  behaviour  taking 
place  within  the  European  Community  rather  than  seeking  to  apply  US  competition  laws. 
Through  positive  comity  the  Commission  can  retain  control,  where  it  so  wishes,  of 
enforcement  procedures  addressing  such behaviour.  Positive  comity  also  has  advantages  for 
companies  as  it  helps  to  reduce  the  number  of  cases  being  examined  by  more  than  one 
competition  authority,  thus  reducing  compliance  costs  and  the  possibility  of  conflicting 
decisions being made by different  competition authorities. 

In  addition,  there  are  potential  benefits  for  the  European  Community  if  it  can  request  the 
US competition  authorities  to  investigate  and  bring  to  an  end  anticompetitive  activities 
occurring  in  the  territory  of  the  United  States  but  adversely  affecting  interests  of  the 
Europe Community.  Positive  Comity  can  enable  problems  encountered  in  the  extraterritorial 
application  of  jurisdiction,  such  as  difficulties  in  obtaining  evidence  located  abroad  to  be 
overcome. 

II. 

The Agreement  between the European Communities  and the Government  of the 
United States of America on the Application  of Positive Comity  Principles  in the 
Enforcement of their Competition Laws 

Before the European Community can enter into deeper cooperation with the US it is necessary 
to address the wide jurisdictional claims made by the US in the application of its antitrust laws. 
It  was  recognized  that  positive  comity  provides  a  method  of  addressing  anticompetitive 
behaviour,  occurring  outside  a  country's  territory,  without  giving  rise  to  the  need  to  exert 
extraterritorial jurisdiction 

Accordingly, on 25 October  1996 the Commission was granted a mandate by the Council to enter 
into negotiations with the United States to seek to reach an agreement which would strengthen the 
positive comity provisions of the 1991 Agreement. 

The  Commission  has  negotiated  a  Draft  Agreement2  with  the  American  authorities.  The 
Draft Agreement  applies where  certain  anticompetitive  activities  are  occurring  in whole  or  in  a 
substantial part in the territory of one Party and yet at the same time also have adverse effects  on 
the interests of the other Party.  In such  cases, the latter Party,  may request the Party in whose 
territory  the  conduct  is  principally  occurring  to  take  enforcement  action  pursuant  to  its  own 
competition rules. 

Agreement between the European  Communities and the  Government  of the United  States of America 
on the application of positive comity principles in the enforcement of their compétition laws. 

3 

The Draft  Agreement  is  an  important  step  forward  from  Article  V  of the  1991 as  it  not  only 
provides guidelines on how positive comity requests should be dealt with, it raises a presumption 
that in certain circumstances a Party will normally defer or suspend its own enforcement activities. 

The presumption of deferral or suspension arises where the anticompetitive activities at issue do not 
have a direct, substantial and reasonably foreseeable impact on the Requesting Party's consumers, 
or where the anticompetitive activities occur principally in and are directed principally towards the 
other  Party's  territory.  In  other  words  the  presumption  arises  where  the  Requesting  Party  is 
seeking to protect its export trade or where the centre of gravity of the anticompetitive activities is 
within the territory of the other Party. 

There are a number of other conditions which also must be satisfied in order for the presumption of 
deferral  or suspension to arise, including, a willingness on the part of the Requested Party to deal 
with the matter, to keep the Requesting Party informed  of all developments and to take the latters 
concerns on board prior to the conclusion of the investigation.  The Requested Party can only act 
on the basis of its own competition rules and to the extent that the relevant behaviour is caught by 
those rules. 

While the  Requested  Party  must  agree  to  a  number  of  conditions  in  order  to  give rise to  the 
presumption of a suspension or deferral, it is not obliged to do so. There is therefore no risk that a 
Requested Party would be obliged to investigate a case where it was not within its interests to do 
so.  However,  very  often  it  will  be  in  the  Requested  Party's  interest  to  bring  an  end  to 
anticompetitive behaviour occurring on its territory and it may be extremely beneficial to have such 
behaviour brought to its attention. 

The Draft  Agreement recognizes that there may be circumstances where it is appropriate for both 
Parties  to  undertake  parallel  investigations,  for  example  when  the  public  interest  requires  that 
particularly  serious  anticompetitive  activity  is  subject  to  sanction  in  both  jurisdictions.  This 
recognition  of  the  possible  appropriateness  of  parallel  investigations  only  applies  where  both 
markets are harmed and would not apply where one Party was seeking to protect its export trade. 

Mergers  are  not  within  the  scope  of  the  Draft  Agreement  due  to  US  and  EC  merger 
legislation,  which  would  not  allow  a  deferral  or  suspension  of  action  as  envisaged  by  the 
Draft  Agreement, due to the obligation to adopt a final decision within tight time limits. 

The  Explanatory  Memorandum  set  out  in  Annex  1  gives  a  detailed  description  of  the 
provisions of the Draft  Agreement. 

III. 

Legal Basis 

In  so far  as the Draft  Agreement  relates to the competition  rules of the EC Treaty,  the legal 
basis for the Council to conclude the Agreement is Article 87 of the EC Treaty in  conjunction 
with the first subparagraph of Article 228 paragraph 3 thereof.  The European Parliament must 
be  consulted  before  the  Council  can  conclude  the  Agreement.  To  the  extent  that  the 
Agreement  applies to ECSC products,  Articles 65 and 66 of the ECSC Treaty form  the legal 
basis for the Commission to conclude the Draft  Agreement. 

In  contrast  to  the  1991  Agreement,  Article  235  of  the  EC  Treaty  does  not  apply  as  cases 
falling under the Merger Regulation are not within the scope of the Draft  Agreement. 

IV.  Conclusion 

The Commission  believes that  the Draft  Agreement  is an  important  development  in relations 
with the US and represents a political commitment on the part of the US to cooperate with the 
Commission rather than seeking to apply its antitrust laws extraterritorially in the EU. 

The Draft  Agreement if entered into will formally institutionalize the political commitment that 
the  US  will  normally  refrain  from  addressing  anticompetitive  behaviour  which  does  not 
affect  US  consumers,  or  is  directed  principally  in  and  directed  principally  towards  the 
European Community, where the Commission is prepared to deal with the matter. 

Due  to  the  advantages  of  positive  comity  described  above,  and  the  reinforcement 
thereof  resulting  from  the  important  presumptions  created  by  the  Draft  Agreement,  the 
Commission  proposes  that  the  Council  jointly  with  the  Commission  adopt  a  decision  to 
conclude  the  attached  Draft  Agreement.  To  this  end,  a  proposal  for  a joint  Council  and 
Commission Decision concluding the Agreement between the European Communities and the 
Government of the United States of America on the application of positive comity principles in 
the enforcement  of their competition laws is set out in Annex 2. 

EXPLANATORY MEMORANDUM 

ANNEX 1 

The  Agreement  between  the  European  Communities  and  the  Government  of  the 
United States  of  America  on  the  Application  of  Positive  Comity  Principles  in  the 
Enforcement  of their Competition Laws 

Description of the Agreement 

Objective 

The main  objective of the Draft  Agreement  is to encourage the use of positive comity principles 
and to specify the circumstances in which positive comity should be invoked and how requests for 
positive comity should be dealt with. 

Article I - Scope and Purpose 

Article  1.1 of  the  Draft  Agreement  sets  out  the  circumstances  in  which  the  agreement  will 
apply.  Namely, where anticompetitive activities are occurring in whole or in substantial part in 
the  territory  of  one  Party  but  are  adversely  affecting  the  interests  of  the  other  Party.  The 
activities in question must be impermissible under the competition  laws of the Party in whose 
territory the activities are occurring. 

Article 1.2 sets out that the purpose of the Draft  Agreement is to remove impediments to trade 
and  investment  flows  and  to  establish  through  cooperation  the  most  effective  and  efficient 
method for the enforcement  of competition laws. 

Article II - Definitions 

The definitions  used in Article II are the same as those used  in the  1991 Agreement,  with the 
important exception of the definition of competition laws.  Here, on both the EC and US sides, 
mergers  have been  specifically  excluded  due to US  and EC  merger legislation,  which  would 
not  allow a deferral  or  suspension  of action as envisaged by the Draft  Agreement,  due to  the 
obligation  to  adopt  a final decision  within  tight  time  limits.  Uke  the  1991  Agreement,  it  is 
necessary  to  provide  for  an  extension  of  the  definition  of  competition  laws  to  take  into 
account  the  possibility  that  further  laws  or  implementing  regulations  may be  adopted  in the 
future.  The need  for  both  parties  to  consent  in writing  to  any  extension  of the  definition  of 
competition  laws  ensures that  there  is no  danger  of the  definition  being extended  beyond  its 
intended scope. 

Three  new  definitions  also  appear;  "Adverse  effects"  and  "Adversely  affected", 
"Requesting Party" and "Requested Party". 

Article  III - Positive  Comity 

Article  III  sets  out  the  principle  of  positive  comity.  Article  III  provides  that  where  a  Party 
believes that  anticompetitive  activities,  c>ccurring in the territory of the other Party,  are  adversely 
affecting  its interests, it may request the other Party's competition authority to  initiate appropriate 
enforcement  activities.  This  possibility  applies  even  if  the  first  Party  lias  commenced  or 
contemplates taking enforcement  action itself. 

Article  IV - Deferral  or Suspension  of Enforcement  Activities 

Article  IV. 1  provides  that  the  parties  may  agree  that  the  Requesting  Party  will  defer  or 
suspend enforcement  activities while the Requested Party is investigating the activities. 

Article  IV.2  sets  out  in  the  detail  the  conditions  which,  if  satisfied,  will  give  rise  to  a 
presumption that the Requesting Party will defer or suspend its enforcement  activities. 

Article  IV.2.  (a)  (i)  is  noteworthy  as  it  contains  a  presumption  of  deferral  or  suspension  of 
enforcement  activities  where  the  anticompetitive  activities  do  not  have  an  impact  on  the 
Requesting Party's consumers.  This means that the presumption of deferral  or suspension shall 
apply where the anticompetitive behaviour affects  only exports. 

There  is  also  a presumption  of  deferral  or  suspension  in  Article  IV.2  (a)  (ii)  if the  centre  of 
gravity  of  the  anticompetitive  activities  is  in  the  territory  of  the  other  Party.  The  centre  of 
gravity  of  an activity  is defined  in the Draft  Agreement  as the territory in which the  activities 
"occur principally in and are directed principally towards". 

Article  IV.2.  (b)  states  that  the  presumption  of  deferral  or  suspension  shall  only  apply  if the 
adverse  effects  on the Requesting  Party  are likely to  be  fully  and  adequately  investigated  and 
remedied  by the Requested  Party.  The Parties  recognize that there may be circumstances where 
it is appropriate for both Parties to  undertake parallel  investigations.  This may be the  case where 
due to the particularly serious nature of the anticompetitive activity public interest requires that it is 
subject to sanction in both jurisdictions. This recognition of the possible appropriateness of parallel 
investigations only applies where the markets of both Parties are harmed. 

Article IV.2 (c)  sets out a number of requirements which the Requested Party must agree to in 
order  for  the  presumption  of  deferral  or  suspension  to  arise.  It  is  necessary  to  set  out  these 
commitments  in  order  for  the  Requesting  Party  to  have  the  confidence  to  defer  or  suspend 
action.  The Requested Party must agree that  it will use its best  efforts  and adequate  resources 
to  investigate  the  activity  and that  it will  keep  the Requesting  Party  informed  of the  status  of 
their  enforcement  activities  and  of  their  intentions.  The  Requested  Party  must  agree  to 
complete  their  investigation  within  six  months  of  the  deferral  or  suspension  or  within  such 
time as agreed to by the competition  authorities.  The Requested  Party must also  agree to  take 
into account the views of the Requesting Party prior to  any conclusion of the investigation and 
to comply with any reasonable request made by the Requesting Party. 

Where it is appropriate to provide confidential  information to the Requesting Party in order to 
keep  that  Party  informed  of  any  action  being  taken,  the  consent  of  the  source  of  that 
information  must  be  obtained.  Community  law  provides  a  high  level  of  protection  to 
confidential  information provided to the Commission,  and it will be necessary that any consent 
obtained  is  sufficient  to  discharge  the  Commission  from  its  obligation  of  confidentiality  as 

provided  by  general  principles  of  Community  Law,  the  case  law  of  the  European  Court 
of Justice  and  Article  20(2)  of  Regulation  No.  17.  Like  the  rest  of the  Draft  Agreement,  this 
Article  must  be  read  in  conjunction  with  Article  VU,  which  states  that  existing  laws  remain 
unchanged. 

If the Requesting  Party  chooses  not to  defer  or  suspend  its  enforcement  activities,  where the 
conditions  of Article IV.2  are satisfied,  it must inform the Requested  Party of its reasons.  This 
duty to give reasons will allow such situations to be closely monitored and explained. 

Article  IV. 3  simply  states  that  a  Requesting  Party  may  choose  to  defer  or  suspend  their 
enforcement  activities even if some of the conditions set out in Article IV.2 are not  satisfied. 

Article  IV.  4  recognizes  that  a Party  that  has  deferred  or  suspended  action  may  later  initiate  or 
reinstitute enforcement  activities.  In such circumstances that Party must inform the other Party  of 
its intentions and reasons. This duty to provide reasons will impose a control over such cases and a 
method for understanding why  cooperation has failed to meet the expectations  of the Requesting 
Party.  Where both Parties take enforcement  action they shall, where appropriate,  cooperate under 
the 1991 Agreement. 

Article  V-  Confidentiality and  Use of Information 

Article V  of the Draft  Agreement  makes it clear that information  provided  under the  Agreement 
may only be used  for the implementation  of the Agreement  unless the competition  authority that 
provided the information  has consented to  another use.  A  further  safeguard  is provided to  those 
who  have  consented  to  certain  confidential  information  being  disclosed,  in that  such  information 
may  not  be  used  for  any  other  purpose  unless  the  competition  authority  and the  source  of  the 
information consent. 

The  confidentiality  of  all  information  provided  under  the  Draft  Agreement  is  protected  by 
Article VIII of the 1991 Agreement and the exchange of letters dated May 31 and July 31,19953. 

Article  VI'- Relationship to the 1991 Agreement 

Article  VI firmly ties  the  1991  Agreement  to  the  Draft  Agreement  and  makes  it  clear  that  the 
Draft Agreement  supplements the  1991  Agreement by developing the concept  of positive comity. 
The Draft Agreement must be interpreted consistently with the 1991 Agreement. 

Article  VII - Existing Law 

Article VQ states that the existing laws of the US and the EC remain unchanged by the Agreement 
and that the Agreement must be interpreted consistently with those existing laws. It is important to 
note that the Agreement  cannot permit either of the Parties' competition authorities to  do any act 
that they do not already have the power to do. 

Article  VIII - Entry into Force and Termination 

Article VIE states that the Agreement will enter into force upon signature. The Agreement may be 
terminated by either Party upon giving 60 days notice of that intention. 

See footnote 1 

ANNEX 2 

Proposal for a 
DECISION OF THE COUNCIL AND THE COMMISSION 
concerning the conclusion of the Agreement between the European Communities 
and the Government of the United States of America regarding the application of 
positive comity principles in the enforcement  of their competition laws 

THE COUNCIL OF THE EUROPEAN UNION, 

THE COMMISSION OF THE EUROPEAN COMMUNITIES, 

Having regard to the Treaty establishing the European Community, and in particular Article 87 
in conjunction  with the first subparagraph of Article 228(3) thereof, 

Having  regard  to  the  Treaty  establishing  the  European  Coal  and  Steel  Community,  and  in 
particular Articles 65 and 66 thereof, 

Having regard to the proposal from the Commission4, 

Having regard to the opinion of the European Parliament5, 

Whereas  the  Agreement  of  23  September  1991  between  the  European  Communities  and 
the  Government  of  the  United  States  of  America  regarding  the  application  of  their 
competition laws,  and  the  exchange  of interpretative  letters  dated  31 May  and  31 July  1995 
in  relation  to  that  Agreement  (together  hereinafter  "the  1991  Agreement"),  attached  to 
Decision  95/145/EC,  ECSC  of  the  Council  and  the  Commission  has  contributed  to 
coordination, cooperation and avoidance of conflicts in competition law enforcement6; 

Whereas  Article  V  of  the  1991  Agreement,  commonly  referred  to  as  the  "Positive  Comity" 
article,  calls for  cooperation  regarding  anticompetitive  activities  occurring  in the territory  of 
one Party that adversely affect  the interests of the other Party; 

Whereas further  elaboration  of the principles of positive comity and of the implementation  of 
those  principles  would  enhance  the  1991  Agreement's  effectiveness  in  relation  to  such 
conduct; 

Whereas, to this end, the Commission  has negotiated  an Agreement  with the Government  of 
the  United  States  of  America  on  the  application  of  positive  comity  principles  in  the 
enforcement  of the competition  rules of the European  Communities  and of the United  States 
of America; 

Whereas the Agreement should be approved, 

OJ No L 95, 27.4.1995, p. 45; corrigendum in OJ No L 131, 15.6.1995, p. 38. 

9 

HAVE ADOPTED THIS DECISION: 

Article  1 

The  Agreement  between  and  the  European  Communities  and  the  Government  of  the 
United  States  of  America  regarding  the  application  of  positive  comity  principles  in  the 
enforcement  of 
is  hereby  approved  on  behalf  of  the 
European Community and the European Coal and Steel Community. 

their  competition 

laws 

The text of the Agreement,  drawn up in the Spanish, Danish, German, Greek, English, French, 
Italian, Dutch, Portuguese, Finnish and Swedish languages, is attached to this Decision. 

, 

Article 2 

The President  of the Council  is hereby authorized  to  designate the person(s)  empowered  to 
sign the Agreement on behalf of the European Community. 

The President of the Commission is hereby authorized to designate the person(s) empowered 
to sign the Agreement on behalf of the European Coal and Steel Community. 

Done at Brussels, 

For the Council 
The President 

For the Commission 
The President 

10 

AGREEMENT BETWEEN THE EUROPEAN COMMUNITIES AND 
THE GOVERNMENT OF THE UNITED STATES OF AMERICA 
ON THE APPLICATION OF POSITIVE COMITY PRINCIPLES 
IN THE ENFORCEMENT OF THEIR COMPETITION LAWS 

The  European  Community  and  the  European  Coal  and  Steel  Community  of  the  one  part 
(hereinafter  "the  European  Communities"),  and  the  Government  of  the  United  States  of 
America  of the other part: 

Having regard to the September 23,  1991 Agreement between the European Communities and 
the  Government  of  the  United  States  of  America  Regarding  the  Application  of  Their 
Competition Laws, and the exchange of interpretative letters dated May 31 and July 31,  1995 
in relation to that Agreement (together hereinafter  "the 1991 Agreement"); 

Recognizing  that  the  1991  Agreement  has  contributed  to  coordination,  cooperation,  and 
avoidance of conflicts in competition law  enforcement; 

Noting  in  particular  Article  V  of  the  1991  Agreement,  commonly  referred  to  as  the 
"Positive Comity"  article,  which  calls  for  cooperation  regarding  anticompetitive  activities 
occurring in the territory of one Party that adversely affect  the interests of the other Party; 

Believing  that  further  elaboration  of  the  principles  of  positive  comity  and  of  the 
implementation  of  those  principles  would  enhance  the  1991  Agreement's  effectiveness  in 
relation to such conduct; and 

Noting that nothing in this Agreement  or its implementation  shall be construed  as  prejudicing 
either Party's position on issues of competition law jurisdiction in the international context; 

Have agreed as follows: 

Article I 
Scope and Purpose of this Agreement 

1. 

This Agreement applies where a Party satisfies the other that there is reason to believe 
that the following circumstances are present: 

(a) 

Anticompetitive  activities  are  occurring  in  whole  or  in  substantial  part  in  the 
territory  of  one  of the  Parties  and  are  adversely  affecting  the  interests  of  the 
other Party; and 

(b) 

The activities in question  are impermissible under  the  competition  laws  of the 
Party in the territory of which the activities are occurring. 

11 

2. 

The purposes of this Agreement are to: 

(a) 

(b) 

Help  ensure  that  trade  and  investment  flows  between  the  Parties  and 
competition  and  consumer  welfare  within the territories  of the Parties  are not 
impeded by anticompetitive activities for which the competition laws of one or 
both Parties can provide a remedy, and 

Establish  cooperative  procedures  to  achieve  the  most  effective  and  efficient 
enforcement  of  competition  law,  whereby  the  competition  authorities  of  each 
Party  will  normally  avoid  allocating  enforcement  resources  to  dealing  with 
anticompetitive  activities that  occur  principally  in  and  are  directed  principally 
towards  the  other  Party's  territory,  where  the  competition  authorities  of  the 
other Party are able and prepared to examine and take effective  sanctions under 
their law to deal with those activities. 

Article II 
Definitions 

As used in this Agreement: 

1. 

"Adverse  effects"  and  "adversely  affected"  mean  harm  caused  by  anticompetitive 
activities to: 

(a) 

the  ability  of  firms  in  the  territory  of  a  Party  to  export  to,  invest  in,  or 
otherwise compete in the territory of the other Party, or 

(b) 

competition in a Party's domestic or import markets. 

2. 

3. 

"Requesting  Party"  means  a  Party  that  is  adversely  affected  by  anticompetitive 
activities occurring in whole or in substantial part in the territory of the other Party. 

"Requested  Party"  means  a  Party  in  the  territory  of  which  such  anticompetitive 
activities appear to be occurring. 

4. 

"Competition iaw(s)" means 

(a) 

(b) 

for  the  European  Communities,  Articles  85,  86,  and  89  of  the  Treaty 
establishing  the  European  Community  (EC),  Articles  65  and  66(7)  of  the 
Treaty establishing the European Coal and Steel Community (ECSC), and their 
implementing  instruments,  to  the  exclusion  of  Council  Regulation  (EEC) 
No 4064/89 on the control of concentrations between undertakings, and 

for  the  United  States  of  America,  the  Sherman  Act  (15  U.S.C.  §§1-7),  the 
Clayton Act (15 U.S.C.  §§12-27, except  as it relates to investigations pursuant 
to  Title  II  of  the  Hart-Scott-Rodino  Antitrust  Improvements  Act  of  1976, 
15 U.S.C.  §18a),  the  Wilson  Tariff  Act  (15  U.S.C.  §§8-11),  and  the  Federal 
Trade Commission Act  (15 U.S.C.  §§41-58,  except  as these  sections relate to 
consumer protection  functions), 

as well as such other laws or regulations as the Parties shall jointly agree in writing to 
be a "competition law" for the purposes of this Agreement. 

12 

5. 

"Competition authorities" means. 

(a) 

for the European Communities, the Commission of the European Communities, 
as  to  its  responsibilities  pursuant  to  the  competition  laws  of  the  European 
Communities, and 

(b) 

for the United States, the Antitrust Division of the United States Department of 
Justice and the Federal Trade Commission. 

"Enforcement  activities"  means  any  application  of  competition  law  by  way  of 
investigation or proceeding conducted by the competition authorities of a Party. 

"Anticompetitive  activities"  means  any  conduct  or  transaction  that  is  impermissible 
under the competition laws of a Party. 

6. 

7. 

Article HI 
Positive Comity 

The competition authorities of a Requesting Party may request the competition authorities of a 
Requested  Party  to  investigate  and,  if  warranted,  to  remedy  anticompetitive  activities  in 
accordance  with  the  Requested  Party's  competition  laws.  Such  a  request  may  be  made 
regardless of whether the activities also violate the Requesting Party's competition laws, and 
regardless of whether the competition authorities of the Requesting Party have commenced or 
contemplate taking enforcement activities under their own competition laws. 

Article IV 
Deferral or Suspension of Investigations in Reliance 
On Enforcement Activity by the Requested Party 

1. 

2. 

The competition authorities of the Parties may agree that the competition authorities of 
the  Requesting  Party  will  defer  or  suspend  pending  or  contemplated  enforcement 
activities during the pendency of enforcement activities of the Requested Party. 

The competition authorities of a Requesting Party will normally defer or suspend their 
own  enforcement  activities  in  favor  of  enforcement  activities  by  the  competition 
authorities of the Requested Party when the following conditions are satisfied: 

13 

(a) 

The anticompetitive activities at issue: 

(i) 

(ii) 

do not have a direct,  substantial  and reasonably foreseeable  impact on 
consumers in the Requesting Party's territory, or 

where  the  anticompetitive  activities  do  have  such  an  impact  on  the 
Requesting  Party's  consumers,  they  occur  principally  in  and  are 
directed principally towards the other Party's territory; 

(b) 

The  adverse  effects  on the  interests  of  the  Requesting  Party  can be  and are 
likely to be fully and adequately investigated and, as appropriate, eliminated or 
adequately remedied pursuant to the laws, procedures,  and available remedies 
of the Requested  Party.  The  Parties  recognize  that  it  may be  appropriate  to 
pursue  separate  enforcement  activities  where  anticompetitive  activities 
affecting  both  territories  justify  the  imposition  of  penalties  within  both 
jurisdictions; 

(c) 

The  competition  authorities  of the Requested  Party  agree  that  in conducting 
their own enforcement activities, they will: 

(i) 

(ii) 

(iii) 

(iv) 

(v) 

devote  adequate  resources to  investigate  the  anticompetitive  activities 
and,  where  appropriate,  promptly  pursue  adequate  enforcement 
activities; 

use  their  best  efforts  to  pursue  all  reasonably  available  sources  of 
information, including such sources of information as may be suggested 
by the competition authorities of the Requesting Party; 

inform the competition authorities of the Requesting Party,  on request 
or at reasonable  intervals,  of the  status  of their  enforcement  activities 
and  intentions,  and  where  appropriate  provide  to  the  competition 
authorities of the  Requesting Party relevant  confidential  information if 
consent  has  been  obtained from the  source  concerned.  The  use  and 
disclosure of such information shall be governed by Article V; 

promptly notify the competition  authorities of the Requesting Party of 
any  change  in  their  intentions  with  respect  to  investigation  or 
enforcement; 

use  their  best  efforts  to  complete  their  investigation  and  to  obtain a 
remedy or initiate proceedings within six months, or such other time as 
agreed to by the competition authorities of the Parties, of the deferral or 
suspension  of  enforcement  activities  by the  competition  authorities  of 
the Requesting Party; 

14 

(vi) 

fully  inform  the competition  authorities  of the Requesting  Party  of the 
results  of  their  investigation,  and  take  into  account  the  views  of  the 
competition authorities of the Requesting Party, prior to any settlement, 
initiation  of  proceedings,  adoption  of  remedies,  or  termination  of  the 
investigation; and 

(vii) 

comply  with  any  reasonable  request  that  may  be  made  by  the 
competition authorities of the Requesting Party. 

3. 

4. 

When  the  above  conditions  are  satisfied,  a  Requesting  Party  which  chooses  not  to 
defer  or  suspend  its enforcement  activities  shall inform  the  competition  authorities  of 
the Requested Party of its reasons. 

The competition  authorities  of the  Requesting  Party  may defer  or  suspend  their  own 
enforcement  activities  if  fewer  than  all  of  the  conditions  set  out  in  paragraph  2 
are satisfied. 

Nothing in this Agreement precludes the competition  authorities of a Requesting Party 
that  choose  to  defer  or  suspend  independent  enforcement  activities  from  later 
initiating  or  reinstituting  such  activities.  In  such  circumstances,  the  competition 
authorities of the Requesting Party will promptly inform the competition authorities of 
the Requested  Party  of their  intentions  and  reasons.  If the  competition  authorities  of 
the Requested Party continue with their own investigation,  the competition  authorities 
of the two Parties  shall, where  appropriate,  coordinate  their  respective  investigations 
under the criteria and procedures of Article IV of the  1991 Agreement. 

Article V 
Confidentiality  and Use of Information 

Where  pursuant  to  this  Agreement  the  competition  authorities  of  one  Party  provide 
information  to the competition  authorities of the other Party for  the purpose  of implementing 
this  Agreement,  that  information  shall be used  by the  latter  competition  authorities  only  for 
that purpose. However, the competition authorities that provided the information  may consent 
to another use, on condition that where confidential information has been provided pursuant to 
Article  IV.2  (c)  (iii)  on  the  basis  of  the  consent  of  the  source  concerned,  that  source  also 
agrees  to  the  other use.  Disclosure  of  such  information  shall  be  governed  by the  provisions 
of Article  VIII  of  the  1991  Agreement  and  the  exchange  of  interpretative  letters  dated 
May 3 land July 31, 1995. 

Article VI 
Relationship to the 1991 Agreement 

This Agreement shall supplement and be interpreted consistently with the  1991 Agreement, which 
remains fully in force. 

15 

Article VH 
Existing Law 

Nothing in this Agreement shall be interpreted in a manner inconsistent with the existing laws, or as 
requiring any change in the laws, of the United States of America or the European Communities or 
of their respective states or Member States. 

Article Vm 
Entry Into Force and Termination 

This Agreement shall enter into force upon signature. 

This Agreement  shall  remain in force  until  60  days  after  the  date  on  which  either Party 
notifies the other Party in writing that it wishes to terminate the Agreement. 

1. 

2. 

IN WITNESS WHEREOF, the undersigned, being duly authorized, have signed this Agreement. 

DONE  at 
,  1997, in the  Spanish, Danish, German, 
Greek, English, French, Italian, Dutch, Portuguese, Finnish and Swedish languages, each one being 
equally authentic. 

, in duplicate, this 

day of 

For the European Community and for the European Coal and Steel Community 

For the Government of the United States of America 

16 

Statement by the Commission 
(on confidentiality  of  information) 

The  Statement made by the Commission in April  1995  on the confidentiality  of  information 
and the exchange  of interpretative  letters dated May 31  and July  31,  1995  in relation to the 
1991 Agreement  apply in their entirety to this Agreement. 

Article  VII  of  this  Agreement  states  that  existing  laws  remain  unchanged  and  that  the 
Agreement  must  be  interpreted  consistently  with  those  existing  laws.  This  Agreement 
therefore  cannot  permit  either of the Parties' competition  authorities to  do  any act they  do 
not  already  have  the  power  to  do.  One  consequence  of  this  is  that  the  Commission  may 
only provide  information  to  the US  authorities  where  it  is  consistent  with  Community  law 
to do so. 

While  this  Agreement  envisages  that  it  may  be  appropriate  to  provide  information  to  the 
other party in order to  keep it informed  of  enforcement  activities,  confidential  information 
may  only  be  provided  with  the  consent  of the  source  of that  information.  Community  law 
provides a high level  of protection to confidential  information provided to the  Commission, 
and it will be necessary that any consent  obtained  is sufficient  to  discharge the  Commission 
from its  obligation  of  confidentiality  pursuant to  general  principles  of  Community  law,  the 
case-law  of  the  Court  of  Justice  of  the  European  Commumties  and  Article  20(2)  of 
Council Regulation No  17. 

Statement by the Commission 
(on transparency) 

The principles on transparency which govern the relationship between the Commission and 
the Member  States in the  application of the competition  rules as enshrined,  for  example,  in 
Council  Regulation  No  17,  and  the  arrangements  contained 
in  the  exchange  of 
interpretative  letters  dated  May  31  and  July  31,  1995  in  relation  to  the  1991  Agreement 
shall apply. 

• 

The  Member  States  shall  be  informed  of  all  proceedings  opened  by  the  Commission  as  a 
result of a request by the US  authorities under Article III of this Agreement. 

•  Member  States  shall  be  informed  when  the  Commission  makes  a  request  to  the 
US  authorities under Article III of this Agreement to investigate anticompetitive activities. 

•  When the Commission  opens  proceedings  following  a request  by the US  authorities  under 
Article III of this Agreement, the undertakings concerned  shall be informed  of the  existence 
of  the  request,  at  the  latest  when  the  statement  of  objections  is  issued,  or  when  a 
publication pursuant to Article  19(3) of Council Regulation No  17 is made. 

•  The  annual  report  presented  by  the  Commission  to  the  European  Parliament  and  the 
Council  on  the  application  of  the  1991  Agreement  shall  also  cover  the  application  of 
this Agreement. 

17 

ISSN 0254-1475 

COM(97) 233 final 

DOCUMENTS 

EN 

08  02  10  11 

Catalogue number  : CB-CO-97-311-EN-C 

ISBN 92-78-21674-7 

Office  for Official  Publications of the European Communities 

L-2985  Luxembourg 

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